The Government is expected to set out plans today (10 September) for an overnight visitor levy, allowing mayors to charge people staying in hotels, B&Bs, holiday lets and other accommodation.
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Charged as a percentage of the accommodation cost, local leaders would decide whether to introduce it in their areas and how the money raised is spent.
No national cap on the level of the charge is expected to be announced, with the scheme set to be implemented towards the end of the 2027-28 financial year.
Full details of the levy have yet to be finalised and a Government response to a consultation launched earlier this year is still awaited.
The plan forms part of Prime Minister Andy Burnham’s wider devolution plans, which aim to give mayors greater powers over local funding and decision-making.
UKH described the proposed system as “unlimited, uncapped and expansive”, warning of a significant impact on hospitality businesses.
Significant impact
The trade body cited figures from Oxford Economics that showed a 5% accommodation levy could result in:
- 33,000 hospitality and tourism jobs lost
- £1.6bn in additional tax paid by holidaymakers
- £2.2bn reduction in GDP
- £1.8bn less tourism spending
In addition, Oxford Economics estimated tourism spending could fall by £1.8bn, with almost nine million fewer overnight accommodation stays.
UKH warned the findings should be regarded as a minimum indication of the potential impact.
UKH chief executive Allen Simpson said: “The 33,000 people who could lose their jobs as a result of this tax, during an employment crisis, will be rightly furious.
“In a week when the Government has talked about growth, cutting red tape, getting people back into work and supporting hospitality, it is set to announce yet another tax that will do the absolute opposite.”
The Government has said the levy will give mayors greater fiscal freedom to invest in transport, infrastructure and visitor economies, describing it as a way of putting English mayors on a similar footing to local leaders in other tourist destinations.
“Give Mayors one tax-raising power on one sector and they will pull that lever until it snaps. You just need to look at the long list of Mayors already lining up to do just that,” Simpson continued.
Growing opposition
Similar schemes are already in place elsewhere. Greater Manchester operates a £1-a-room-per-night visitor charge, while Edinburgh introduced a 5% visitor levy in July. Wales is also due to give councils powers to introduce a visitor levy from April 2027.
However, the latest warning adds to growing opposition from the hospitality sector, which has previously raised concerns over the impact of the levy on businesses and consumers.
This comes a day after Prime Minister Andy Burnham told MPs the Government needed to “go further” to support hospitality.
Ahead of the autumn Budget on Wednesday 28 October, UKH called on the Chancellor to cut VAT, fix business rates and lower employer National Insurance costs.
Simpson added: “Tinkering around the edges is not enough. There has to be a substantial reduction in hospitality’s tax burden next month.
“The Government claims this tax is normal. It’s not.
“There are scant examples of a destination with our 20% level of VAT and a holiday tax, for a reason. If it wants to use that argument, it should practice what it preaches and lower hospitality VAT to 10%, in line with Europe.”
